Pay Off Credit Card Debt with Savings App Digit

Stephanie Miller
June 5, 2018
Digit Pay App

Digit isn’t a new app. In fact, people have been saving money with Digit since 2014, automatically tucking cash away each month without even thinking about it (to the tune of over $1 billion total). Now, though, Digit wants to help its users do even more, using their automated savings to pay down credit card debt.

Recently, Digit announced Digit Pay, an exciting new service intended to help users pay off credit card debt using their saved funds. This is important, as approximately 75% of the app’s current users are walking around with credit card debt. When you consider that the average household carries over $16,000 in debt (which costs them around $1,200 in interest each year), it’s easy to see why it’s important to pay down these balances.

Let’s take a look at what Digit does to help users with their savings goals, and why this new focus on credit card debt is so impactful.

How Digit Works

Digit is an app that provides an automated approach to saving money. Once connected with a user’s checking account, Digit will begin transferring small amounts of money as the month goes on. It bases its deposits on the user’s spending habits and their available balance, ensuring that money is saved in the most manageable way.

It’s the savings equivalent of the frog-and-boiling-water theory. While $1.50 here and $0.80 there don’t seem like much, they add up quickly over time. Before you know it, Digit will have saved you hundreds of dollars, without you even feeling the pinch.

Once you’ve met your savings goals or have enough to make an impact, you can simply transfer your funds out of the digit account and straight to your bank. You can then use them toward a vacation, down payment on a car, or whatever you had planned to save for. Of course, you could always use those saved funds to pay off your debt, but now, with Digit Pay, it’s even easier to do so.

What Digit Pay Does

Earlier this month, the popular savings app announced a new feature called Digit Pay. This new option within the app will allow users to earmark their accrued savings, specifically for paying down credit card debt.

Users will continue saving through the hands-off app as usual, allowing their savings to build based on their checking account habits and availability. However, Digit users can now set “credit card debt” goals within the app, earmarking their funds for balance payoffs.

Even better than that, though, is the auto-paydown feature of Digit Pay. You’ll not only save money each month for your debt goals, but Digit will automatically make an additional payment to your linked credit card once a month on your behalf, entirely automating the process.

Why You’d Use Digit Pay

Setting aside savings each month isn’t too difficult, in theory. You can either ask your company to redirect a certain amount of each paycheck into a savings account, you can transfer a percentage of your pay the same day it hits, or you can work savings into your monthly budget. Easy, right?

Well, unfortunately, life has a way of getting in between us and our financial goals sometimes. After all, that might be how you wound up in credit card debt to begin with – it can be very easy to say you’ll pay off your total balance “next month” or that you’ll save more “once things calm down.” That doesn’t always happen, though, and before you know it, you’re $10,000 in debt with no end in sight.

This is where Digit – and now Digit Pay – shines.

Digit automates the saving process based on what you can afford. The app learns your spending habits and your balance trends. It transfers savings out in small increments, so they aren’t as impactful on your balance. By the end of the month, though, the app will have tucked away a notable amount of cash.

With Digit Pay, this money can go towards getting you out of debt faster. You’ll set specific goals based on your account balances and link your applicable cards. Each month, the funds that Digit has saved for you will automatically be sent to your credit card company in the form of an extra payment.

You’re not able to forget and you won’t talk yourself out of it “just this month.” You’ll just notice that your debt account balance is going down faster than ever before, and you don’t even notice the difference that those small Digit transfers have on your checking account.

At the end of the day, the savings and debt-payoff method that’s best for you is the one that you actually use. If you are disciplined at saving each month and have a dedicated plan for paying down your credit card debt, that’s great. Digit might not even be necessary in your case.

However, if you have trouble saving money each month, tend to forget or talk yourself out of setting aside funds, or have trouble allocating extra cash toward your debt, sign up for Digit. Not only will you be shocked at how easy it is to save each month, but now with Digit Pay, you’ll enjoy reaching debt-free status even faster.

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